Arnold Schimsky, as Trustee of The Ann P. Shimsky Trust v. United States Office of Personnel Management

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
The Honorable Lyle E. Strom, Senior United States District Judge for**
the District of Nebraska, sitting by designation.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ARNOLD SCHIMSKY, as Trustee of The
Ann P. Shimsky Trust and representative
of Ann P. Shimsky, deceased,
Plaintiff - Appellant,
v.
UNITED STATES OFFICE OF
PERSONNEL MANAGEMENT and
THC-ORANGE COUNTY INC., doing
business as Kindred Hospital San Diego,
Defendants - Appellees.
No. 08-56983
D.C. No. 3:07-cv-02432-H-LSP
MEMORANDUM*
Appeal from the United States District Court
for the Southern District of California
Marilyn L. Huff, District Judge, Presiding
Argued and Submitted October 7, 2010
Pasadena, California
Before: FISHER and BYBEE, Circuit Judges, and STROM, District Judge.**
FILED
OCT 18 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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If the parties wish to pursue court-facilitated mediation, we will consider a1
motion to stay the mandate.
2
Arnold Schimsky appeals the district court’s dismissal of his complaint
against the United States Office of Personnel Management (“OPM”). In his
complaint, Schimsky sought to recover benefits under the Federal Employees
Health Benefits Act. Because Schimsky did not exhaust administrative remedies
prior to filing his action, the district court dismissed the complaint for lack of
subject matter jurisdiction. On appeal, Schimsky argues the district court erred in
dismissing rather than staying his action. We agree and remand to the district court
with instructions to stay the action pending exhaustion of administrative remedies.1
We review the district court’s dismissal for lack of subject matter
jurisdiction de novo. Snell v. Cleveland, Inc., 316 F.3d 822, 825 (9th Cir. 2002)
(per curiam). Additionally, where exhaustion is non-jurisdictional, we review the
district court’s decision to dismiss an action for failure to exhaust administrative
remedies for abuse of discretion. Pension Benefit Guar. Corp. v. Carter & Tillery
Enters., 133 F.3d 1183, 1187 (9th Cir. 1998).
Contrary to the district court’s determination, the exhaustion requirement in
this case was non-jurisdictional because it was created by agency regulations and
was not mandated by statute. See id. (“[W]hen . . . the exhaustion requirement is

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At oral argument, OPM raised 5 C.F.R. § 890.105(e)(1)(iii) for the first2
time and argued that Schimsky was not diligent because he could have treated Blue
Cross’s failure to issue an initial coverage decision within 120 days as a denial of
coverage. Because OPM failed to raise this argument either in its brief or before
the district court, it has been waived. Butler v. Curry, 528 F.3d 624, 642 (9th Cir.
2008). We note, however, that by its plain language, the regulation refers to
review of a denied claim, not to OPM review of a claim that has not yet been
denied.
3
created by agency regulations, the decision whether to require exhaustion is a
matter for district court discretion.” (quoting Kobleur v. Grp. Hosp. & Med. Servs.,
954 F.2d 705, 711 (11th Cir. 1992))); cf. Kucana v. Holder, 130 S. Ct. 827, 831
(2010) (holding that a statutory jurisdiction-stripping provision applied only to
“[agency] determinations made discretionary by statute, [and not] to
determinations declared discretionary by the [agency itself] through regulation”).
Accordingly, the district court had discretion to stay rather than dismiss the action.
Schimsky filed his action on December 31, 2007, the day before the statute
of limitations was set to expire for some of his claims. Schimsky did not exhaust
administrative remedies because he had not yet received a denial of coverage from
Blue Cross. Without a denial of coverage, Schimsky could not commence the
administrative review process. See 5 C.F.R. § 890.105(a). Yet if Schimsky2
waited for a denial of coverage, the statute of limitations would have run out for
some of his claims. See id. § 890.107(d)(2). Under these circumstances, the

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4
district court erred by dismissing rather than staying the action pending exhaustion
of administrative remedies. See Pension Benefit Guar. Corp., 133 F.3d at 1187
(“[P]articularly where a statute of limitations problem might develop, [a stay
pending exhaustion] may represent the best accommodation of the competing
interests.” (quoting Morrison-Knudsen Co. v. CHG Int’l, Inc., 811 F.2d 1209,
1223 (9th Cir. 1987))) (emphasis in original); accord Sharber v. Spirit Mountain
Gaming Inc., 343 F.3d 974, 976 (9th Cir. 2003) (per curiam). Accordingly, we
reverse the judgment of the district court and remand with instructions to stay the
action pending Schimsky’s exhaustion of his administrative remedies.
REVERSED and REMANDED.

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